Strategy starts with purpose
Strategy is one of the most overused, yet misunderstood, words in leadership circles. When I type ‘strategy’ into Google, I get 3.7 million results! The biggest danger is that the members of your leadership team have different views about what it means. In other words: there is no clarity and alignment.
In the Gritty Leaders Club podcast, Ben Wales and I have just recorded our 3rd episode on strategy and have a 4th lined up! It’s a big subject; nevertheless, I want to lay out some principles in my blog this month and next month. If you want to know more, check out the podcast, or pre-order my book, The Leadership Map, where I devote a whole chapter to strategy and another one to Strategic Priorities, including a section on The Tools of Strategy.
Let's start with a definition
My favourite is from Michael Porter (Harvard Business School Professor and author of Competitive Strategy, Competitive Advantage and numerous other articles and books on the subject), who said that it is your sustainable competitive advantage. In simple terms it is an advantage, or point of difference, you hold over your competition that is sustainable. This means that your customers (or consumers in B2B) must view you as different and believe you are different from your competition.
Some obvious examples might be Aldi and Lidl, who have challenged the other UK supermarket brands through their no-frills shopping experience and good prices, coupled with a focus on operational excellence. Tesla, changed the car market with a completely revolutionary product, producing high quality, long-range, electric cars to compete with the premium automobile makers, whilst changing the buying experience to on-line. Who would have thought we’d buy a £50,000 car with one click! Finally, some businesses differentiate themselves through the customer experience, like Waitrose, The Four Seasons hotels or Virgin Upper Class.
The point is that you must take a stand, decide what you are going to be world-class at and stick to it, as Porter says, “don’t get stuck in the middle.” This does not mean that, if you decide it is all about the product, as in the case of Dyson or Tesla, that the customer experience or the operational efficiency doesn’t matter. You must have a minimum standard for all three areas, and then decide which one you will major on. Here is a simple model to help you.
You can see from the model that we need to start with our Purpose – why our business exists or what you are truly passionate about. Then, who are your customers (demographics), where do they want to shop and what’s important to them. Then your focus or niche: Product leadership, Operational Excellence or Customer Intimacy. Finally, your economic engine, or how are you going to make money: is it high volume and low margin, or low volume and high margin, is it products, services, experiences, or could it be a subscription model?